US 10% Tariff in Court
A federal trade court is hearing challenges to President Trump’s new 10% global import tax, creating fresh legal uncertainty for companies that rely on cross‑border supply chains. States and small businesses argue the administration used a different statutory route to sidestep the Supreme Court’s earlier rejection of most of Trump’s previous tariffs, and the case could determine whether the levy stands or is voided. Even if the administration wins, firms now must price not only the tariff itself but the risk that policy will be altered by judges—making trade costs less predictable. (reuters.com) (ms.now)
A court in lower Manhattan is hearing a fight over a tax that now touches almost every shipment entering the United States: President Donald Trump’s 10 percent tariff on most imports took effect on February 24, and challengers want it thrown out. The hearing is in the United States Court of International Trade, a specialized federal court that handles customs and tariff disputes. (reuters.com) (thehill.com) This case exists because the Supreme Court already knocked out most of Trump’s earlier tariff program on February 20, 2026. That earlier round had relied on the 1977 International Emergency Economic Powers Act, and the new 10 percent tariff uses a different law passed in 1974. (politico.com) (thehill.com) The new legal hook is Section 122 of the Trade Act of 1974. That statute lets a president put a surcharge of up to 15 percent on imports for as long as 150 days if the United States is facing a “large and serious” balance-of-payments deficit. (politico.com) (thehill.com) The administration says the country buys far more goods from abroad than it sells, and that gap justifies the tariff. The states suing say that is like looking only at one side of a household budget and ignoring the paycheck, because a balance of payments includes capital flowing into the country, not just the trade in goods. (thehill.com) (economictimes.indiatimes.com) That argument is not coming from one company with one container stuck at a port. A coalition of 24 mostly Democratic-led states sued on March 5, and two small businesses filed a separate challenge that is being heard alongside it. (reuters.com) (politico.com) The two businesses are Burlap & Barrel, which sells spices, and Basic Fun!, the toy company behind brands including Tonka, Lincoln Logs, and K’nex. Their point is simple: when a tariff lands on goods at the border, a small importer has to either eat the cost, raise prices, or cut orders. (thehill.com) The states want more than a declaration that the tariff is unlawful. They are also asking the court to stop collection and to force refunds for tariff costs paid while the policy was in effect, which is why this is not just a theory fight about presidential power. (politico.com) There is a second layer here that makes companies nervous even if they can handle a 10 percent hit. Trump has said Section 122 is a temporary bridge while his administration runs other trade investigations that could support longer-lasting tariffs under separate laws. (politico.com) So importers are not just pricing a tariff anymore. They are pricing a tariff, a possible refund, a possible court loss for the government, and the chance that a different tariff replaces this one a few months later. (reuters.com) (politico.com) That is why this hearing matters beyond trade lawyers and customs brokers. If the court says Section 122 cannot be stretched this far, Trump loses one of the fastest ways to tax imports without Congress; if the court says it can, companies get a signal that even after the Supreme Court blocked one tariff route, another one may still survive. (reuters.com) (thehill.com)
